Solar Incentives by State 2026 � Tax Credits, Rebates & Net Metering
Table of Contents
Solar Incentives by State 2026 — Tax Credits, Rebates & Net Metering
Updated July 2026. The federal solar tax credit landscape changed dramatically at the end of 2025. If you are planning a solar installation this year, understanding exactly which incentives still apply — and which do not — is critical to your financial return. This guide covers the current federal status, state-by-state incentives, net metering policies, and what you need to know before you buy.
⚠️ Critical Update for 2026
The federal residential solar tax credit (Section 25D) expired December 31, 2025. Residential customers installing solar in 2026 no longer qualify for a federal tax credit. Commercial customers can still claim 30% through Section 48E through 2027. State and local incentives may still apply.
Federal Tax Credit Status (2026)
Section 25D — Residential: EXPIRED
The federal residential solar tax credit (Section 25D) expired on December 31, 2025. For residential customers installing solar systems in 2026, there is no federal tax credit available. This is a major shift from prior years when homeowners could claim 30% of system costs. Residential customers should focus on state incentives, net metering value, and battery storage to maximize project economics.
Section 48 / 48E — Commercial: 30% Still Available
Commercial solar installations can still claim a 30% federal tax credit through Section 48E. To qualify:
- Construction must begin by July 4, 2026, OR
- The system must be placed in service by December 31, 2027.
The credit applies to panels, inverters, batteries, racking, wiring, and installation labor. There is no cap on the credit amount. Unused credits can be carried back 3 years or forward 22 years.
Section 48E — Leases / PPAs
Third-party owned systems (leases and Power Purchase Agreements) can also access the 30% commercial credit through 2027, provided the project owner is a tax-paying entity. The lease/PPA rate to the customer typically reflects the tax benefit indirectly through lower monthly payments.
Domestic Content Bonus — +10%
Projects using at least 40% domestic content (non-Chinese manufactured components) can claim an additional 10% tax credit. The domestic content threshold increases to 60% after 2029. We stock BABA-compliant panels from Qcells (Georgia), Mission Solar (Texas), and Solar4America (California). Shop BABA-compliant products →
Energy Community Bonus — +10%
Projects located in designated energy communities (brownfield sites, coal communities, or areas with significant fossil fuel employment) can claim an additional 10% credit. This bonus stacks with the domestic content bonus, meaning a qualifying commercial project could receive up to 50% total federal tax credit.
State Solar Incentives by State (2026)
With the federal residential credit expired, state and local incentives are now the primary drivers of solar economics for homeowners. Below is a comprehensive state-by-state breakdown.
| State | Federal Status | State Credits / Rebates | Net Metering / Billing | Tax Exemptions | SRECs |
|---|---|---|---|---|---|
| Arizona | Residential: None Commercial: 30% |
25% state tax credit (up to $1,000). Solar water heater rebates up to $3,000. | Net billing at ~75% of retail rate. Export credits lower than full retail. | Property tax exemption for solar value. | No SREC market. |
| California | Residential: None Commercial: 30% |
No state tax credit. SGIP battery rebates available (funding limited). | NEM 3.0: export at ~5–8¢/kWh. Solar + battery is now essential. | Property tax exclusion (active solar energy systems). | No SREC market. |
| Colorado | Residential: None Commercial: 30% |
No state tax credit. Some utility rebates (Xcel Energy, Colorado Springs). | Net metering at full retail for most utilities. | Property tax exemption. Sales tax exemption on some equipment. | No SREC market. |
| Connecticut | Residential: None Commercial: 30% |
State rebate program (reduced funding). Low-income adders available. | Net metering for systems up to 2 MW. Virtual net metering for shared arrays. | Property tax exemption. Sales tax exemption. | No SREC market. |
| Florida | Residential: None Commercial: 30% |
No state tax credit. Some utility rebates (Duke Energy, FPL). | Retail net metering (under legislative threat). Check current utility rules. | Property tax exemption for 100% of solar value. | No SREC market. |
| Hawaii | Residential: None Commercial: 30% |
No state tax credit. Some Hawaii Energy rebates for solar water heating. | Self-supply / Grid Supply+. No export without battery storage on most islands. | Property tax exemption. | No SREC market. |
| Maryland | Residential: None Commercial: 30% |
No state tax credit. MEA grants for low-to-moderate income. | Net metering (sunset July 1, 2027). Transition to net billing expected. | Sales tax exemption. Property tax exemption. | Active SREC market. |
| Massachusetts | Residential: None Commercial: 30% |
State tax credit up to $1,000. SMART program (fixed tariff declining). | Net metering with caps. Community solar programs available. | Sales tax exemption. Property tax exemption. | Active SREC market (SREC-II transitioning to SMART). |
| Nevada | Residential: None Commercial: 30% |
No state tax credit. Battery rebate program currently suspended. | Net metering Tier 4 at ~75% of retail rate. Declining tiers. | Property tax exemption. | No SREC market. |
| New Jersey | Residential: None Commercial: 30% |
No state tax credit. SuSI program (transitioning from SRECs). | Retail net metering for systems up to 5 MW. | Sales tax exemption. Property tax exemption. | SREC market transitioning to SuSI. |
| New Mexico | Residential: None Commercial: 30% |
10% state tax credit (up to $6,000, refundable). Solar water heating rebates. | Net metering at full retail for most utilities. | Property tax exemption. No sales tax on solar equipment. | No SREC market. |
| New York | Residential: None Commercial: 30% |
25% state tax credit (up to $5,000). NY-Sun rebates for low-income. | Net metering / VDER. Value of Distributed Energy Resources. | Property tax exemption. Sales tax exemption. | No SREC market. |
| North Carolina | Residential: None Commercial: 30% |
No state tax credit. | Net metering at full retail for most utilities. | Property tax exemption for 80% of solar value. | No SREC market. |
| Oregon | Residential: None Commercial: 30% |
State tax credit up to $6,000 (check current availability). Solar water heater rebates. | Net metering at full retail for most utilities. | Property tax exemption. | No SREC market. |
| Texas | Residential: None Commercial: 30% |
No state tax credit. No statewide net metering. | Utility-dependent. Some utilities offer net metering; many do not. | Property tax exemption for solar value. | No SREC market. |
| Utah | Residential: None Commercial: 30% |
No state tax credit. Some utility rebates (Rocky Mountain Power). | Net metering at avoided cost for Rocky Mountain Power. Reduced export value. | Property tax exemption (partial). | No SREC market. |
| Vermont | Residential: None Commercial: 30% |
Limited state incentives (check current VEPP programs). | Net metering with caps. Community solar programs. | Property tax exemption. | No SREC market. |
| Virginia | Residential: None Commercial: 30% |
No state tax credit. Some utility solar programs (Dominion Energy). | Net metering for residential up to 25 kW. Larger systems use net billing. | Property tax exemption for residential systems. | No SREC market. |
| Washington | Residential: None Commercial: 30% |
No state tax credit. | Net metering at full retail for most utilities. | Sales tax exemption for solar equipment. | No SREC market. |
| Wisconsin | Residential: None Commercial: 30% |
No state tax credit. Focus on Energy rebates (limited). | Utility-dependent. Some utilities offer net metering; many do not. | Property tax exemption. | No SREC market. |
Why This Matters for Your Solar Purchase
Residential Customers in 2026
With no federal tax credit available, your solar economics now depend on three factors:
- State incentives: States like New York (25% up to $5,000), New Mexico (10% up to $6,000), and Arizona (25% up to $1,000) still offer meaningful tax credits. Check the table above for your state.
- Net metering value: In NEM 3.0 states (California, Nevada), export rates are low. Battery storage is essential to store your solar for evening use rather than exporting at a discount. In full net metering states (Colorado, New Jersey, Oregon), solar remains highly attractive.
- Electricity rates: High-rate states (California, Hawaii, Massachusetts, New York) still see strong solar payback even without the federal credit because the avoided cost of utility electricity is high.
Commercial Customers in 2026
Commercial solar is still highly attractive in 2026:
- 30% federal credit through Section 48E is still available.
- Bonus credits: Domestic content (+10%) and energy community (+10%) can bring total federal credits to 40–50%.
- Depreciation: MACRS depreciation allows businesses to recover 85% of system cost over 5 years (with bonus depreciation rules).
- Deadline: Construction must begin by July 4, 2026 or be in service by December 31, 2027. Do not wait.
DIY Installers
DIY residential installers face the same loss of the federal credit as professional installations. However, your lower total system cost (no installer markup) partially offsets the missing credit. Focus on:
- States with strong net metering or high electricity rates.
- Adding battery storage in NEM 3.0 states to maximize self-consumption.
- Checking local permitting and utility interconnection requirements before ordering equipment.
Shop Solar Equipment at Portlandia Electric Supply
Whether you are a homeowner navigating post-ITC solar economics or a commercial contractor racing the July 2026 deadline, Portlandia Electric Supply provides wholesale pricing on Tier 1 equipment with fast nationwide shipping.
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Frequently Asked Questions
Contact Portlandia Electric Supply
Need help navigating 2026 solar incentives? Our team of NABCEP-certified professionals can help you understand your state programs, size your system, and choose the right equipment.
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